Esserman v. Ind. Dep't of Envtl. Mgmt.

• Decision Date: 02 November 2017
• Docket Number: No. 49S02-1704-PL-00189.,49S02-1704-PL-00189.
• Parties: Suzanne E. ESSERMAN, Appellant (Plaintiff below), v. INDIANA DEPARTMENT OF ENVIRONMENTAL MANAGEMENT, Appellee (Defendant below).
• Court: Indiana Supreme Court

84 N.E.3d 1185

Suzanne E. ESSERMAN, Appellant (Plaintiff below),
v.
INDIANA DEPARTMENT OF ENVIRONMENTAL MANAGEMENT, Appellee (Defendant below).

No. 49S02-1704-PL-00189.

Supreme Court of Indiana.

Filed November 2, 2017

Attorneys for Appellant : Mary Jane Lapointe, Daniel Lapointe Kent, Lapointe Law Firm, P.C., Indianapolis, IN

Attorneys for Appellee : Curtis T. Hill, Jr., Attorney General of Indiana, Thomas M. Fisher, Solicitor General, Indianapolis, IN, Andrea E. Rahman, Deputy Attorney General, Indianapolis, IN

Slaughter, Justice.

Plaintiff seeks damages under Indiana's False Claims and Whistleblower Protection Act for what she claims was a retaliatory discharge by her employer, the Indiana Department of Environmental Management. Plaintiff's claim does not sound in tort but is based on the Department's alleged violation of the Act. Indiana has not abrogated common-law sovereign immunity for non-tort claims premised on the violation of a statute. Esserman can thus proceed with her statutory claim only if the State has waived sovereign immunity concerning it. Applying the governing standard, we hold the legislature did not "clearly evince" an intention to waive sovereign immunity by authorizing whistleblower claims under the Act against a generic "employer" without expressly defining that term to include the State. We thus affirm the dismissal of Plaintiff's complaint and remand with instructions.

Factual and Procedural History

Plaintiff, Suzanne E. Esserman, worked at the Indiana Department of Environmental Management for nearly twenty-five years. Most recently, she oversaw claims for disbursements from the Department's excess-liability trust fund. The fund helps defray the costs of cleaning up petroleum leaks from underground storage tanks. Esserman alleges that certain Department employees approved disbursements from the fund without proper documentation, and that many applicants received payments from the fund to which they were not entitled. Rather than commending Esserman for uncovering irregularities in trust-fund disbursements, the Department fired her.

Believing the Department terminated her in retaliation for objecting to the improper disbursements, Esserman filed a wrongful-termination complaint in the Marion Superior Court, alleging the Department violated the whistleblower provision (Section 8) of the Indiana False Claims and Whistleblower Protection Act, Ind. Code ch. 5–11–5.5. (2010 Repl.). The Department moved to dismiss her complaint on two grounds: first, under Trial Rule 12(B)(1), claiming the trial court lacked subject-matter jurisdiction; and,

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second, under Rule 12(B)(6), claiming Esserman failed to state a claim upon which relief can be granted. The trial court found for the Department on both grounds and dismissed her complaint. The Court of Appeals reversed and remanded, concluding the Department was not entitled to sovereign immunity, and that the trial court erred in dismissing the complaint. Esserman v. Indiana Dep't. of Envt'l Mgmt., 66 N.E.3d 993 (Ind. Ct. App. 2016). We granted transfer, thus vacating the Court of Appeals' opinion, and now affirm the trial court and remand with instructions.

Standard of Review

Our case law is not consistent in addressing whether sovereign immunity implicates a court's subject-matter jurisdiction. Rather than resolve this issue today, we note that the trial court premised its dismissal on both Rules 12(B)(1) and 12(B)(6). We elect to review the court's dismissal under the alternative ground that Esserman's complaint failed to state a claim upon which relief can be granted. We leave for another day whether sovereign immunity warrants dismissal on jurisdictional grounds.

A 12(B)(6) motion tests the legal sufficiency of the complaint, requiring that we accept as true all facts alleged in the complaint. Price v. Indiana Dep't. of Child Services, 80 N.E.3d 170, 173 (Ind. 2017) (citation omitted). "We review 12(B)(6) motions de novo and will affirm a dismissal if the allegations are incapable of supporting relief under any set of circumstances." Id. (citation and internal quotation marks omitted). We will also affirm the dismissal if the decision is sustainable on any basis in the record. Id.

Discussion and Decision

Indiana has not abrogated common-law sovereign immunity for non-tort claims premised on the violation of a statute. We hold the State has not waived sovereign immunity here because Section 8 of the Act—the whistleblower provision—does not clearly evince the legislature's intention to subject the State to suit for violations of the Act. The trial court was right to dismiss Esserman's claim under Trial Rule 12(B)(6). But the dismissal should have been without prejudice to her filing an amended complaint.

I. Although this Court has abrogated common-law sovereign immunity almost entirely for tort claims, we have not done so for non-tort claims based on a statute.

The doctrine of sovereign immunity, which dates to English common law, prevents the sovereign from being sued in his own courts without his consent. The doctrine took hold in this country from the earliest days of the republic. The federal government enjoys sovereign immunity, Chief Justice Marshall observed, and cannot be sued unless Congress authorizes it. "As the United States are not suable of common right, the party who institutes such suit must bring his case within the authority of some act of congress, or the court cannot exercise jurisdiction over it." United States v. Clarke, 33 U.S. (8 Pet.) 436, 443, 8 L.Ed. 1001 (1834).

In addition to the national government, States also enjoy sovereign immunity, which predates the nation's founding and survived ratification of the U.S. Constitution. "[T]he States' immunity from suit is a fundamental aspect of the sovereignty which the States enjoyed before the ratification of the Constitution, and which they retain today[.]" Alden v. Maine, 527 U.S. 706, 713, 119 S.Ct. 2240, 144 L.Ed.2d 636 (1999). An early Supreme Court case, Chisholm v. Georgia, 2 U.S. (2 Dall.) 419, 1 L.Ed. 440 (1793), subjected Georgia to suit by a citizen of South Carolina. But the

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States' strong and swift opposition to Chisholm led to ratification of the Eleventh Amendment two years later in 1795. The Eleventh Amendment immunizes States from federal lawsuits by citizens of other states and has been interpreted to apply to suits by a State's own citizens. See Hans v. Louisiana, 134 U.S. 1, 10 S.Ct. 504, 33 L.Ed. 842 (1890).

From the earliest days of statehood—and even preceding it—our legislature enacted a "reception statute" formally "receiving" or adopting as the law of Indiana much of the common law of England. See I.C. § 1–1–2–1 (Fourth); See also 1807 Ind. Acts (Terr.) Ch. XXIV, pp. 139–40 (approved Sept. 7, 1807); 1824 Ind. Acts Ch. LVIII, pp. 256–57 (approved Jan. 2, 1818); 1 Ind. Rev. St. ch. 61, pp. 351–52 (1852) (§ 1 codified at Ind. Code § 1–1–2–1 (2017) ; § 2 codified as amended at § 1–1–2–2 (1993)). What Indiana "received" are those common-law principles, including sovereign immunity, that existed before 1607, the fourth year of the reign of James I of England, so long as they were not inconsistent with the constitutions and statutes of the United States or of the State of Indiana. State v. Home Brewing Co. of Indianapolis, 182 Ind. 75, 79, 105 N.E. 909, 911 (1914). See also Perkins v. State, 252 Ind. 549, 552, 251 N.E.2d 30, 32 (Ind. 1969) ("This principle [of sovereign immunity] was carried over in our colonial system of the common law.").

Until the adoption of our 1851 constitution, "the only recognized method for bringing an action against the State was to convince the legislature to pass an act authorizing a particular individual to bring suit." State v. Rendleman, 603 N.E.2d 1333, 1335 (Ind. 1992). See, e.g., State v. Trustees of the Vincennes Univ., 5 Ind. 77, 84–85 (1854) (referencing 1846 legislation entitled "an act to authorize the trustees of the Vincennes university to bring suit against the state of Indiana, and for other purposes"). But the 1851 constitution expressly banned this practice of legislating individual waivers, specifying that the legislature can waive sovereign immunity only by enacting a "general law":

Provision may be made, by general law, for bringing suit against the State, as to all liabilities originating after the adoption of this Constitution; but no special act authorizing such suit to be brought, or making compensation to any person claiming damages against the State, shall ever be passed.

1 Rev. St., p. 52, Ind. Const. art. IV, § 24 (1852). The legislature did not waive sovereign immunity until 1889, "when it passed legislation allowing individuals with contract claims to sue the State." Rendleman, 603 N.E.2d at 1335 (citing Carr v. State, 127 Ind. 204, 26 N.E. 778 (1891) ).

Over the years, the rule in Indiana remained that only the legislature, by enacting a general law, could waive the State's sovereign immunity. "In the absence of a statutory law creating a liability, the rule universally recognized and enforced is that neither a state nor the United States is legally liable to respond in damages to a person for an injury resulting...